What is fiscal and monetary policy?

• Fiscal policy is a government tool used to manage the economy through taxation, government spending, and other government activities.

• Monetary policy is the use of a nation’s money supply and interest rates to influence economic activity.

• An example of fiscal policy is taxation; the government can adjust the tax rates to influence consumer spending and economic growth.

• An example of monetary policy is altering the interest rates; the government can raise or lower interest rates to increase or decrease the amount of money available for borrowing.

• Another example of fiscal policy is government spending; the government can increase spending on projects such as infrastructure to stimulate the economy.

• Another example of monetary policy is quantitative easing; the government can increase the money supply to increase the amount of money available for borrowing and investment.

• Finally, an example of fiscal policy is debt management; the government can adjust its debt levels to influence the economy.